Eye on Washington: HEALTH LEGISLATIVE AGENDA IN 2017

AAMS reviews the post-American Health Care Act (AHCA) health agenda for the remainder of 2017, the health legislative vehicles that are still active in this Congress and discusses other legislative areas where health policy may appear.

CHIP

The Medicare Access and CHIP Reauthorization Act (MACRA) reauthorized the Children’s Health Insurance Program (CHIP) for four years but only provided two years of funding, through September 30, 2017. However, states will need certainty on this funding long before that, making efforts to extend CHIP likely to occur in the summer before the August recess. There is bipartisan agreement in extending CHIP, and Health and Human Services (HHS) Secretary Tom Price suggested extending CHIP for as long as possible in his confirmation hearing, beyond the five years suggested by CHIP-champion Senator Sherrod Brown (D-OH).

MACRA AND HEALTH POLICY EXTENDERS

When Congress passed MACRA in April 2015, a number of health policies were extended in the bill. These provisions will expire on September 30, 2017, or on December 31, 2017. Among these expiring provisions are the therapy cap exception process and funding for Community Health Centers. (See chart below for details.)

The Senate Health, Education, Labor, and Pensions (HELP) Committee has already begun holding hearings on reauthorizing the user fee agreements, as well as the House Energy and Commerce Committee. HELP Committee Chairman Lamar Alexander (R-TN) made comments emphasizing the urgency in advancing this legislation, as the FDA will have to lay off employees on October 1, 2017, if new authorizations are not approved. This would significantly delay and disrupt the FDA’s review of products. In advance of this scenario, the FDA is required to begin notifying employees of potential layoffs 60 days in advance, which would occur at the end of July.

DRUG PRICING

While the immediate next steps on repealing and replacing the Affordable Care Act (ACA) are unclear, the ongoing bipartisan attention to drug pricing issues remains. There is bipartisan concern and public pressure on this issue, and the President has expressed his own interest in tackling it, ensuring that it will remain in the spotlight for inclusion on numerous vehicles.

Members of both parties have expressed support for drug pricing solutions such as Medicare directly negotiating drug prices and allowing reimportation of drugs from Canada. Other Members have sought to side-step these proposals by arguing for the use of market forces to address high drug costs.

While legislation cannot be attached to the confirmation of the FDA Commissioner nominee Scott Gottlieb, his confirmation hearing in the Senate HELP Committee on April 5th is likely to discuss the FDA’s role in fostering competition and other methods of addressing the drug pricing issue.

The user fee agreements are the most natural legislative vehicle that drug pricing legislation could be attached to, but the time constraints in enacting these agreements will likely result in few riders being added. However, consideration of the user fee agreements will raise questions of whether the FDA’s process for evaluating and approving drugs hindering market competition and fostering higher prices. In addition, addressing market abuses such as those detailed in the Senate Aging Committee’s report in the 114th Congress will likely be discussed. Ways to balance access to innovative and breakthrough drugs, such as drugs curing Hepatitis C or treating cancer, with the cost to patients and payers will continue to be a focus for this debate.

DEBT CEILING

Suspension of the debt ceiling expired on March 15, 2017, and the Treasury Department is currently using “extraordinary measures” to manage the government’s finances for the time being. These efforts are expected to be exhausted by summer or fall of this year, at which time Congress will need to raise the debt ceiling. This is expected to be controversial for conservative Republicans, and Democrats may have to help pass debt ceiling legislation, meaning that few, if any, riders will be possible.

APPROPRIATIONS

The current Continuing Resolution (CR) for FY 2017 expires on April 28, 2017. Absent a new CR or appropriations legislation, the government could shut down. While it is not yet clear if conservative Republicans will seek to attach health policy riders to funding legislation, it is important to recall that in 2013 conservatives shut the government down in a failed bid to defund the ACA. With Republicans now in charge of government, it is unclear whether they would repeat this effort or seek to include other provisions to force Democrats to block them.

Beyond the current fiscal year (FY), the FY 2018 budget process is beginning. The President released his “blueprint” budget on March 16, 2017, and a full proposal is expected in May. The House and Senate Appropriations Committees have begun holding subcommittee hearings, which will underpin their work in developing the 12 appropriations bills. While the President’s budget provides policy and funding recommendations, specific health policy proposals from the President budget could be included in the appropriations bills. Ultimately, Congressional gridlock is likely to produce either a further CR or an end-of-year omnibus appropriations bill, but health policy proposals on the ACA and other areas may be sources of negotiation.

TAX REFORM

With the failure of AHCA, President Trump and Congressional Republicans are turning their attention to tax reform. As part of this effort, a new reconciliation vehicle may be created through a FY 2018 budget resolution.

Tax reform legislation could include some tax provisions included in Title II of AHCA, which comprised the portion of the legislation developed and approved by the Ways and Means Committee. Proposals affecting the Cadillac Tax or the Medical Device Tax are the most likely candidates, but improvements to

the ACA’s tax credits or the treatment of tax-advantaged accounts for health spending could be included as well.

INFRASTRUCTURE AND TRANSPORTATION

During the 2016 campaign, both Republicans and Democrats discussed investment in infrastructure and transportation. However, a legislative package would need 60 votes in the Senate to overcome a filibuster, meaning that the support of at least eight Democrats would be needed for passage. Both parties have their own ideas of what this package should entail. Democrats want a stimulus package that includes direct spending to invest in rebuilding infrastructure. Republicans, on the other hand, have floated the idea of providing tax relief to private investment in infrastructure projects. Through a potential package both parties hope to spur job creation and economic growth.

It is possible that health items could be attached to a future package, likely as sweeteners to attract votes. It is not clear what those items could be or whether a package will materialize at all. But should a package develop, look for small health reform ideas with broad bipartisan consensus to be attached, as anything controversial will sink the bill.

UNFORESEEN EVENTS

Natural disasters, renewed pandemic threats from the Zika virus or Ebola, and other crises could create moving legislative vehicles with health provisions. However, issues such as these are likely to be addressed through the appropriations process and are less open to partisan policy additions.

LOOKING AHEAD

With these major legislative vehicles and political considerations in mind, there is an immediate next hurdle for Congress. The current CR to fund the government expires on April 28, 2017. With a two week recess in April, there are less than 10 session days left for Congress to approve a new CR or omnibus appropriations legislation. Complicating this effort is whether conservatives demand riders related to reproductive health or other health reform be included. In addition, including funding for President Trump’s border wall at the southern border and additional funding for immigration enforcement will also create a challenge. However, Members of the House and Senate Appropriations Committees have hinted that they are nearing an agreement on an omnibus appropriations package for the remainder of FY 2017, but it is not clear if it will include funding for the President’s priorities on defense and border security.

CONCLUSION

The post-AHCA health landscape in the 115th Congress is complicated but there will be many opportunities for advancing changes in health policy. The key to capitalizing on these opportunities is understanding which Members matter, what issues are likely to receive attention, and how things fit into the big picture. While AHCA is done, expect Congress to still be busy with health policy.

It’s been BUSY in Washington DC, and AAMS has been staying on top of it. In case you missed our more recent Eye on Washington columns….